In payroll compliance, insurable earnings are used to calculate premiums for which program?

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Prepare for the Canadian Payroll Compliance Legislation Exam. Study with multiple choice questions, each accompanied by hints and explanations. Get ready for your certification exam!

Multiple Choice

In payroll compliance, insurable earnings are used to calculate premiums for which program?

Explanation:
Insurable earnings are the portion of an employee’s earnings used to calculate Employment Insurance premiums. In Canada, EI premiums are deducted on insurable earnings up to the annual maximum insurable amount, with separate rates for the employee and the employer. The Canada Pension Plan (and the Quebec Pension Plan) uses pensionable earnings to determine CPP/QPP contributions, not insurable earnings, and Ontario Health Insurance is funded through taxes rather than payroll premiums tied to insurable earnings. So the program that uses insurable earnings to calculate premiums is Employment Insurance.

Insurable earnings are the portion of an employee’s earnings used to calculate Employment Insurance premiums. In Canada, EI premiums are deducted on insurable earnings up to the annual maximum insurable amount, with separate rates for the employee and the employer. The Canada Pension Plan (and the Quebec Pension Plan) uses pensionable earnings to determine CPP/QPP contributions, not insurable earnings, and Ontario Health Insurance is funded through taxes rather than payroll premiums tied to insurable earnings. So the program that uses insurable earnings to calculate premiums is Employment Insurance.

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